CSR , chinas subway construction corp in full expansion

Accuracy score :
97%

CRRC Corp Ltd H  01766

Summary (from latest annual report 2015 and quarterly report 2016)

  • Total equity  : 14.88 billion USD
  • Market Cap is 26.05 billion USD ( last price of the stock is 7.41 HKD)
  • CRRC Corp Ltd along with it subsidiaries is engaged in research & development, design, manufacturing, refurbishment, sales, leasing & technical support of rail vehicles, rapid transit vehicles, engineering machinery & electromechanical equipment
  • Equity of total company increased from 14.5 billion USD in 2015 to 14.88 billion in 2016
  • Company has 5.17 billion USD in cash on account (from latest quarterly report)
  •  Total equity – cash on account = 14.88 billion USD – 5.17 billion USD = 9.71 billion USD
  • In 2016 company had 2.63 billion USD long-term debt, short – term debt was 5.29 billion USD                                                                                                                                                            (In 2015 company had 5.2 billion USD short-term debt , long-term debt was 2.14 billion USD)
  • In 2016 quarterly report - total equity increased to 14.88 billion  USD from 14.5 billion USD in 2015, total debt is 7.92 billion USD in 2016)
  • Company's revenue increased in 2015 to 36.28 billion USD from 17.9 billion in 2014
  • Net income in 2015 was 1.77 billion USD, Net income in 2014 was 0.8 billion USD
  • In 2015 company paid 870 million USD dividend to its shareholders

CRRC Corp Ltd H  01766

 

CSR Corporation Limited (“CSR”) was incorporated in the PRC on 28 December 2007 as a joint stock company with limited liability under the Company Law of the PRC. CSR’s A shares were listed on the Shanghai Stock Exchange (the “SSE”) on 18 August 2008 and CSR’s H shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “HKSE”) on 21 August 2008. In 2012, CSR completed the non-public offering and the total number of shares became 13,803,000,000 after the offering. Between 2004 and 2007 CSR had ~50% of the internal Chinese market for locomotives and ~80% of the market for multiple units (by volume), as well as a ~50% share in locomotive and wagon refurbishment. In the same period overseas sales accounted for ~7-8% of revenue.

China CNR Corporation Limited (“CNR”) was incorporated in the PRC on 26 June 2008 as a joint stock company with limited liability under the Company Law of the PRC. CNR made an initial public offering of A shares which were listed on the SSE on 29 December 2009. H shares of CNR were listed on the Main Board of the HKSE on 22 May 2014. As at 31 December 2014, the total number of shares issued by CNR was 12,259,780,000.

 

CSR and CNR published a joint announcement on 30 December 2014

 

CSR and CNR published a joint announcement on 30 December 2014, announcing that the two companies entered into a merger agreement with respect to a merger proposal (“2015 Business Combination”). CSR and CNR would merge by CSR issuing, on the basis of a single exchange ratio, CSR A shares and CSR H shares to holders of CNR A shares and CNR H shares respectively in exchange for all of the issued shares of CNR. The exchange ratio was 1:1.10, meaning that each CNR A share should be exchanged for 1.10 CSR A shares to be issued by CSR and that each CNR H share should be exchanged for 1.10 CSR H shares to be issued by CSR. As all of the conditions of the above agreement as specified in the merger agreement had been satisfied, the merger agreement became effective on 28 May 2015. CNR A shares were deregistered from the SSE and CNR H shares were deregistered from the Main Board of HKSE. After completion of the merger, CSR has assumed all the assets, liabilities and business of CNR and CNR was deregistered according to law.

On 1 June 2015, the name of CSR was changed from “CSR Corporation Limited” to “CRRC Corporation Limited” (“CRRC”or “the Company”). The Company and its subsidiaries (collectively the “Group”) are principally engaged in the research and development, design, manufacturing, refurbishment and service of locomotives(including multiple units), metro cars, engineering machinery, mechanical and electric equipment, electronic equipment, environmental protection equipment and related components products, as well as sales, technical service and equipment leasing of related products; imports and exports; industrial investment of above businesses; assets management; information consultation, etc.

Operating revenue of the Company increased by 8.85% as compared to the same period of the previous year and the contributions made by railway equipment business, rapid transit vehicles and urban infrastructure business, new businesses and modern service business accounted for 54.48%, 10.29%, 22.09% and 13.14% respectively. The Company’s operating revenue from Mainland China represents 88.8% of  total revenue, other countries and regions represents 11.2% of total revenue. CRRC has shares in joint ventures - Bombardier Sifang (Qingdao) Transportation Ltd. and Kawasaki Heavy Industries.

  • China division is worth 22.8 billion USD
  • Other countries and regions divisions are worth 3.2 billion USD

 

 CRRC  standalone subsidiaries and acquisitions :

  • In February 2014, CSR acquired the Argentine rolling stock manufacturer Emprendimientos Ferroviarios for undisclosed amount (less than 100 million USD)
  • Times Electric (a subsidiary of the Company) completed a 180 million USD acquisition of the UK-based ROV and trenching equipment manufacturer Specialist Machine Developments (SMD), also known as Soil Machine Dynamics
  • The company owned ~46% of the shares in "South Huiton", a freight wagon manufacturer, and palm fibre processing company worth 400 million USD

Total = 680 million usd

CRRC is considering the acquisition of a controlling stake in Bombardier Inc.’s train business. Bombardier may fetch as much as $5.4 billion if it decides to sell the rail unit, which has played a “stabilizing role” amid the struggles at the company’s aerospace business. Acquiring the rail unit would give the Chinese company an international presence and enable them to take advantage of surging exports.

 

 

Opinion about the company

Fundamentally it is a good company and in the future we can expect its growth (Total debt is 7.92 billion USD, company has 5.17 billion USD in cash on account, ROE is around 16 %).